Guide
How to Write the Market Analysis Section of a Business Plan (With Free Census Data)
The market analysis is the section lenders and investors check hardest. Here is how to build one from free, official data, with a worked example, a template you can adapt and a checklist.
What the market analysis section has to prove
The market analysis answers one question for a lender, investor or mentor: is there a large enough, reachable group of customers in this place to support this business? It is the section where readers look hardest for evidence, because everything else in the plan (sales forecast, staffing, the size of the loan) rests on it.
A convincing section does four things:
- Defines the customer precisely enough that they can be counted.
- Sizes the market in a specific geography, with numbers a reader can check.
- Compares options honestly if you are choosing between locations.
- States what the data doesn't show, such as competitors, rent and actual demand, and how you will find out.
The most common weakness is the unsupported claim: "our city is growing and affluent." Every number in this section should name its source, its survey year and the geography it covers. The good news is that the core demographic evidence is free, from the U.S. Census Bureau.
Step 1: Define your customer so they can be counted
Start with who buys, not with the whole industry. "Coffee drinkers" can't be counted in any useful way. "Working adults living within a 10-minute drive, with household income above the local median" maps onto data you can actually pull.
Write one or two sentences that cover:
- Who buys: households, individuals in an age range, or local businesses.
- What they can spend: whether income or home values matter to your price point.
- How far they will travel, or where you will deliver.
If you sell to other businesses, your "customer count" is the number of establishments of the right type. The Census Bureau's County Business Patterns counts those by industry code and area.
Step 2: Choose the geography, and say why
Lenders want the market measured where you will actually trade. For a storefront that's usually a city or county. For a service business it's the area you can cover, and for online sales it can be national.
If you're still deciding where to open, list the two to four places you're seriously considering. Comparing them is often the most persuasive part of the section, because it shows the location was chosen on evidence rather than habit.
State the geography plainly, for example: "Our primary market is the City of Charlotte, North Carolina. We compared it with Nashville and Austin before choosing."
Step 3: Pull the core numbers free from the Census Bureau
The American Community Survey (ACS) is the standard source for local demographics in a business plan. It is free, it covers every U.S. city and county, and lenders recognise it. Use the 5-year estimates, which cover every place regardless of size. The 1-year estimates only cover areas with 65,000 or more people (Census guidance).
Four numbers carry most market analyses:
| Measure | ACS table | Why a reader cares |
|---|---|---|
| Total population | B01003 | The size of the pool of potential customers |
| Median household income | B19013 | Whether people here can afford your price point |
| Median home value | B25077 | Local wealth and cost of living, and a rough guide to rents |
| Population change over 5 years | B01003, two releases | Whether the market is growing or shrinking |
Three free ways to get them:
- data.census.gov: search a table code such as "B19013", then filter by geography (for example "Place" for a city). It is the official source, but the interface takes some practice.
- Census Business Builder: a free Census tool that presents selected demographic and economic data in a simpler format, tailored to particular kinds of users. It takes less practice than data.census.gov.
- Census Reporter: a free, independent site that presents the same ACS data as readable city profiles, with table codes shown.
For growth, compare the same table in two ACS 5-year releases that don't overlap, such as 2015–2019 against 2020–2024. Note that 5-year estimates average across their years and carry margins of error. For small differences between places, say "roughly similar" rather than ranking them.
Step 4: Put the places side by side
A single city's numbers mean little on their own. Is $82,000 a high median income? Only by comparison. A side-by-side table lets a reader judge the market in seconds.
Worked example: a founder planning a specialty coffee shop is choosing between three cities.
| City | Population | Median household income | Median home value | Population change, 5 years |
|---|---|---|---|---|
| Austin, TX | 979,539 | $93,658 | $555,300 | +3.0% |
| Charlotte, NC | 903,844 | $82,068 | $385,700 | +5.4% |
| Nashville, TN | 690,130 | $77,371 | $413,600 | +4.0% |
Source: U.S. Census Bureau, American Community Survey 5-year estimates (2020–2024), tables B01003, B19013 and B25077. Change compares the 2015–2019 and 2020–2024 releases. Nashville figures are for the Census place "Nashville-Davidson metropolitan government (balance)." Margins of error are small for cities this size: Austin's median income, for example, is $93,658 ± $1,670.
Then say in plain words what the table means for this business:
Austin has the largest and highest-income market, which supports premium pricing, but it also has the highest home values, a sign of higher commercial rents. Charlotte is growing fastest and costs less to live in, with income close to Austin's. Nashville is the smallest of the three. On demographics alone, Charlotte offers the best balance of growth, spending power and cost.
Notice what that paragraph does. It interprets the numbers, ties them to price and cost, and stops short of claiming the data proves demand.
Step 5: Add what the Census can't tell you
Demographics show whether customers could exist. They don't show competitors, rents or whether people will actually buy. A strong section names these gaps and fills what it can.
- Competition: count similar businesses in your area. Use County Business Patterns for official counts by industry, then walk the neighbourhood and search maps for direct competitors. List the three closest, with what they charge.
- Rent and costs: get two or three real quotes from commercial listings or a local broker. Home values only hint at rents.
- Demand evidence: pre-orders, a waitlist, a pop-up, survey responses or letters of intent. Even a small amount of first-hand evidence outweighs a page of statistics.
- Industry context: your trade association's figures, or the SBA's market research and competitive analysis guidance, which lists further free sources, including Census Business Builder.
If you can't fill a gap yet, say how you will: "We will confirm lease rates with two brokers before signing." Readers trust a plan that shows its limits.
Step 6: Cite every number
Put the source, the survey and its years, and the geography beside each figure, or in a note under each table. Use the form shown in Step 4.
This matters for two reasons. A reader can check you in a minute, and the figures stay honest when the plan is updated. An uncited number invites the question "where did this come from?" at the worst moment: in a loan meeting.
A template you can adapt
Market analysis. Our target customers are [who], within [distance or area] of our location in [city, state]. [City] has a population of [number], a median household income of [amount] and a median home value of [amount] (U.S. Census Bureau, ACS 5-year estimates, [years]). Its population changed by [percent] over five years. We compared [city] with [other cities]: [one sentence on why ours is the better fit]. There are [number] similar businesses in the area, the closest being [names]. Commercial rents are about [amount] per square foot, based on [source]. Early demand evidence includes [pre-orders, survey or waitlist]. The figures above don't measure [gap], which we will confirm by [method and date].
Common mistakes
- National statistics for a local business. "Americans spend billions on coffee" says nothing about your street.
- Numbers with no year or source. Readers can't check them, so they discount them.
- Mixing geographies. City income compared with county population makes an apples-to-oranges table.
- Treating demographics as demand. A wealthy, growing city still needs evidence that people will buy from you.
- Ranking places on tiny differences. Estimates have margins of error. A 1% income gap is not a finding.
Checklist before you submit
- Customer defined in one or two countable sentences
- Geography stated, with the reason it was chosen
- Population, income, home value and growth, all for the same geography and survey
- A comparison table if you considered more than one place
- Competitors named, with prices
- At least one real rent quote
- Some first-hand demand evidence
- Every figure cited with source, survey years and geography
- Gaps named, with how and when you will close them
Doing Steps 3 and 4 faster
Everything above can be done free with the Census tools listed. If you'd rather not assemble the tables by hand, ifYouMind does Steps 3 and 4 for you. Enter your business and the U.S. cities you're considering, and it pulls the same ACS figures, compares the places side by side and cites every number to the Census.
The free brief compares your main city with one other. A full Decision Report compares up to three others and is written up for your business plan. You can see a sample report before you sign up. Steps 1, 2, 5 and 6 are still yours: no tool can count your competitors' prices or get you a rent quote.
Sources
- U.S. Census Bureau, American Community Survey (5-year estimates)
- U.S. Census Bureau, Using 1-year or 5-year American Community Survey data
- U.S. Census Bureau, data.census.gov
- U.S. Census Bureau, Census Business Builder
- U.S. Census Bureau, County Business Patterns
- U.S. Small Business Administration, Plan your business: market research and competitive analysis
- Census Reporter
City figures were retrieved in October 2026 from the Census Bureau's ACS 5-year tables via data.census.gov, and the 2024 values were cross-checked with Census Reporter.